The Consumer Financial Protection Bureau and the Federal Trade Commission have filed an amicus brief in a Fair Debt Collection Practices Act case before the Court of Appeals for the Eleventh Circuit over the defendant charging convenience or “pay-to-pay” fees when consumers made payments by phone or online, arguing that the defendant is incorrect in stating that Section 1692f(1) of the FDCPA doesn’t apply to convenience fees and that the fees in question are permitted by law.
The Background: Two plaintiffs filed separate lawsuits that were later consolidated that accused the defendant of violating the FDCPA by charging fees between $7.50 and $12 when they tried to make payments over the phone or online. A payment processor processed the payments for the defendant and retained only $0.40 of each fee. One plaintiff paid a convenience fee 26 times, the other 10.
- The defendant filed motions to dismiss, which were denied. The plaintiffs then filed motions for judgment on the stipulated facts and the court entered judgment for each plaintiff, which the defendant appealed to the 11th Circuit. The defendant argues that 1692f(1) doesn’t apply to convenience fees because the section says that it applies to debts or amounts that are incidental to the debt and that convenience fees are neither.
The Argument: Looking at the definition of incidental is all that the court needs to determine that convenience fees meet that standard, the CFPB and FTC argue in their brief, noting that without the mortgage payment itself there is no need for a convenience fee.
- The two sides also spar over the word “collect.”
- Finally, the regulators argue that consumers feel compelled to pay convenience fees because the payments are processed faster than payments sent in via the mail and are less likely to get lost than a check that is mailed. Because consumers can’t choose who collects on their debts, they are thus obligated to follow whatever rules that entity has, meaning consumers can’t choose a collector that doesn’t charge a convenience fee.
- “… the whole point of debt collection is to get consumers to pay debts. It is therefore in debt collectors’ interest to provide convenient payment methods — even if they cannot charge extra for it,” they wrote.
